Hunger Games

The conservative plan to starve government has paid off with the IRS scandal

May 23, 2013

The more we learn about the IRS vetting of conservative groups, the less it looks like an abuse of power than something much more mundane—a beleaguered agency with too few resources to handle its work-load.

As The New York Timesreported this past weekend, the IRS division that oversees tax-exempt groups was chronically understaffed and overwhelmed even before a surge in applications from political groups in 2010. Once the dodgy applications started piling up (dodgy because political groups that don’t reveal their donors aren’t supposed to get tax exemptions), it’s not surprising that the IRS cut corners, adopting search terms like “patriot” to help flag the conservative groups who were largely behind the increase. This was insensitive and inexcusable—a real crime against political correctness. But it was the kind of mistake people make when they’re overworked, not on a witch hunt.

And yet, when you take a step back from the IRS scandal, there does appear to be something slightly sinister going on. Except that the scheming is on the right and not the left. Since the Republican House takeover in 2010, conservatives have laid the groundwork for a cynical two-step: First, squeeze funding for government programs, making it harder for civil servants to do their jobs. Then, when the inevitable screw-up comes, use it as further justification for cuts. Against this backdrop, the IRS scandal looks like only the latest step in the conservative long-game.

The most obvious example of this maneuver is, of course, health care, where Obama has repeatedly asked Congress for some of the $5-10 billion the government will need to implement the Affordable Care Act over the next decade. Naturally, Republicans have balked at this, leaving the Department of Health and Human Services to beg private insurers for whatever loose change they can spare. If the implementation ends up being a fiasco, you can bet Republicans will use it as evidence that health care reform was horribly misconceived. In fact, they’re not even waiting that long. “[I]mplementation is going to get messy,” wrote the conservative pundit Ben Domenech in March. “Republicans are likely to seize on every sad story as justification for dramatic changes—and in 2016, mount campaigns designed to replace the system in whole or in part.”

And it’s not just health care. Dodd-Frank, the major financial reform bill the president signed three years ago, substantially increased the power of agencies like the SEC and the CFTC to regulate financial markets. The only way to tap these powers was to substantially increase these agencies’ budgets, as the administration proposed. Instead, the GOP Congress held their funding far below what the Dodd-Frank bill called for. CFTC officials found themselves boarding Mega Buses at 5:30AM so they could save money on trips to New York.

In fairness, part of the explanation is that Republicans were making a play for Wall Street cash and wanted to go easy on their donors. Still, if there’s another financial blow-up any time soon, the GOP will almost surely argue that the regulators got too much authority, not too little. I know this because Republicans used the debate over financial reform as a dry run for this critique. “Lehman is gone, but the failures of the Fed and SEC are still with us, and should not be rewarded with new regulatory powers,” explained Spencer Bachus, the top Republican on the House committee that oversees Wall Street, in 2010.

For that matter, the GOP’s entire budget strategy for the last two-and-a-half years only really makes sense as an effort to discredit government. As expert after expert has pointed out, domestic discretionary spending—the pot of money Congress approves for the various agencies each year—is a pretty small fraction of what the government spends overall (about 15 percent and falling). You could cut it to oblivion and still not save much in the grand scheme of things. Yet when it comes to actual budget cutting, as opposed to idle pontificating, Republicans have trained most of their zeal on this category of spending—which, over the past two years, has been cut to its lowest level since 1962. And that was before the sequester, which slashes it further.

What’s the advantage of cutting discretionary spending? As it happens, this is the sort of spending that affects almost everyone in the country directly, funding everything from air traffic controllers to meat inspectors to disaster management. If the feds screw these things up, voters are not going to feel very confident in government. Which, I suppose, is the point.

The IRS fits the pattern too. Here’s a brief history of the agency’s budget since Republicans took over the House. In 2011, the IRS proposed boosting its $12 billion allowance by $500 million, mostly because going after tax cheats was chewing up more resources. The Republicans countered by offering to cut the budget by $600 million, before eventually settling for a $20 million trim. The following year, Republicans lopped off another $300 million. Congress did finally relent in 2013, approving a $70 million increase. But this still left the IRS well below its 2011 funding level.

Did any Republican strategist specifically foresee that squeezing the agency would create a scandal in which conservatives could claim to be victims? Of course not. And it’s far from clear that giving the agency a few hundred million more dollars here or there would have ended the dysfunction in the Exempt Organizations division, whose problems long preceded John Boehner’s speakership. But what holding down the IRS budget clearly did do was make it impossible to solve these problems for anyone who might have wanted to.

More generally, the budget strains prevented the agency from staffing up appropriately across the board, increasing the chances of a major snafu somewhere in its vast organization chart. As Colleen Kelley, the head of the union that represents IRS employees, said when Republicans beat back the agency’s 2011 budget request (and then crowed about it in the press), “This will compromise enforcement efforts, thus reducing government revenue, and serve as an obstacle to improved customer service.” Go figure.

The just and logical result of this chain of events would be to discredit the people intent on starving government. Instead, the scandal has become a convenient talking point for opponents of government itself. The IRS uproar “probably represents the last shovelful of dirt on the central mission of Barack Obama’s presidency: rehabilitating Big Government’s reputation as a necessary first step toward a new Progressive Era,” wrote the economics commentator James Pethokoukis in National Review. More alarmingly, mainstream pundits are echoing this conclusion. “The IRS flap eats away at the underpinnings of what President Barack Obama promised when he first ran in 2008,” wrote the centrist columnist Jerry Seib the following week. “A revival of confidence that government is capable of solving problems in a smart and nonideological manner.”

I’m afraid Seib is right. As it’s currently playing out, the scandal probably is sapping confidence in government. But how we got to this point is no accident. It was the plan all along.

Noam Scheiber is a senior editor at The New Republic. Follow him on Twitter: @noamscheiber